The trends of recession and a failing economy have been quite evident since some time now. Just a couple of weeks ago, Germany – EU’s biggest economy – has shown clear signs of recession. For almost half a year, high inflation fed by astronomical natural gas prices in EU have undermined consumer pricing power and imposed heavy costs on businesses. Amidst the chaos, Indian exporters have been put in a ‘hot seat’ as export orders are being cancelled and the region’s demand is expected to take a downfall. The EU accounts for almost 15% of India’s total outbound shipments, making it one of India’s major export markets.
“There are visible symptoms of recession in the EU. Energy crisis is looming there. Buyers are delaying orders from India. They are concerned but hopeful,”Ajay Sahai, Federation of Indian Export Organisations (FIEO) Director General
Sahai also said that with sanctions in place against Russia, the situation may be just right for Indian exporters to tap that market and boost exports going into the region.
Biswajit Dhar, a Professor of Economics at Jawaharlal Nehru University, said the government should rework its strategy on the export front as the EU situation is not good. “It is not just an energy crisis, it is a larger problem of slowing down of the economies in EU countries. That should be a source of concern for us. If major markets like the EU face such recessionary tendencies, our exports could actually suffer,” Dhar said.
Sharing similar views, Technocraft Industries founder and chairman Sharad Kumar Saraf said EU buyers are cancelling orders and it would affect the country’s exports in the coming months. “Situation is not good at the export front, particularly for sectors such as textiles and chemicals,” he added.
India’s exports to the EU stood at USD 30.8 billion during April-August 2022. It was USD 65 billion in 2021-22.
In a meeting with the exporters last week, Piyush Goyal (Minister for Commerce and Industry) said that India must be on a watch to expand trade opportunities and grab them as they appear. On the other hand, the industry flagged certain issues related to the rising cost of raw materials and subdued demand in certain key export markets. The requested that left out sectors be embraced under RoDTEP (Remissions of Duties and Taxes on Exported Products) and existing RoDTEP rates be rationalised, while also requesting to explore the possibility for increased support under Interest Equalisation Scheme and Market Access Initiative (MAI).
A decline in exports of sectors such as engineering, ready-made garments and rice led to a contraction in the country’s overall outbound shipments by 3.52% to USD 32.62 billion in September, while the trade deficit widened to USD 26.72 billion, according to the preliminary data of the Commerce Ministry.